Bankers are running scared because so many banks are on the verge of insolvency or have already reached that state. So they are not lending. They are still way over-leveraged and trying to work off all the bad loans they still have on their books. Lower bank stock values do not help the capital ratios. Because it is difficult for companies to finance their operations, economic activity, pretty much everywhere throughout the EU, continues to contract. We see this in weaker than expected GDP numbers.

This in turn is causing more bad loans at the banks and yet more contraction of bank loans to businesses. This downward spiral has all the outer appearances of being a deflationary down turn, except that inflation in the EU is rising, not falling. This presents an interesting conundrum. I think the answer is twofold. Clearly, ECB money printing is inflationary. Second, the demand for the euro is falling as people take their money out of Europe. This all bode bad for Euro bulls.

Lower EU GDP / Higher monetary base = I am afraid the Euro has further to go on the downside.

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We are at the begining of the end for Greece. With their upcoming elections in June, the Greek government is even more rudderless than normal – and it is bad even when its good. Will Greece even have the capability to manage a switch back to a Drachma? Think about it – a EU country in turmoil like this? Its dangerous. The only hope is that the Troika can come and at least provide transition support or risk huge contegion that will ripple across the globe. We have now a better than a 50% chance now that we will wake up with a disaster on our hands. My suggest is to take some risk off the table and use smaller lot sizes, the best you can until this resolves in some manner. Don’t be a hero and preserve capital – the crisis will pass – live to trade another day.

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It does not mean that they will fall further immediately, but if we really do have rough times ahead with the sovereign debt bubbles bursting all over the world, this market definitely has further to go down. Keep in mind that this thumbnail chart showed is an inflation adjusted chart. So if the economic ills we see today are solved with monetary expansion, in real terms house prices may merely stay flat or even rise from here. If it is solved with austerity, in a deflationary scenario, house prices could fall even more than the 30% from today’s levels. The housing picture shows yet another head wind for the economy to recover from, as all the housing related industries as well will suffer.

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A quote from on of the protesters: “We are ordinary people. We are like you: people, who get up every morning to study, work or find a job, people who have family and friends. People, who work hard every day to provide a better future for those around us. Some of us consider ourselves progressive, others conservative. Some of us are believers, some not. Some of us have clearly defined ideologies, others are apolitical, but we are all concerned and angry about the political, economic, and social outlook which we see around us: corruption among politicians, businessmen, bankers, leaving us helpless, without a voice.”

So what will the landscape look like in 12 months? The best guess is that the Greeks will be forced out due to political indecision. Italy, Ireland and Portugal will muddle along with their austerity and bailouts. The French and Germans will tango together over the next year, with Germans giving in a bit and the French fudging past agreements they have made where they can. But Spain? This will be the “Lehman” moment. Its “too big to rescue” and is too far gone to fix. So a rocky year ahead for Europe, but the real crisis is still a year away – it is a slow process. Sadly the people are not feeling enough pain yet, to demand and force real change. Over the next 12 months watch for all the different acronyms of new central bank policies that will aid in this slow “kicking the can down the road” process, until …?

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Dimon told analysts: “We added different types of people, talented people and stuff like that. Until recently, they were careful and successful,” he said. “There were many errors, sloppiness and bad judgment,” Dimon said, as the company’s stock fell sharply and taking the rest of the market with them. “These were egregious mistakes, they were self-inflicted.” His crisis manager has coached him well – get out in front and just accept responsibiity, propose some lame solution, and then continue what you do.

Lets not go into whether this is just of the tip of the iceberg, both at JPMorgan and other TBTF (too big to fail) banks – as the fear is that they are all doing it. Lets not go into that fact that the ink is just now dry on new bankster US regulations and then this happens. So much for the Volcker rule. Lets not go into, well if they were bad judgements, Dimon is not taking the responsibility and falling on his sword. The point I always bring up is – these elitist are simple not that smart. They only have celebrity status, money and know how to speak politically correct to convince you that they are smart. All these elitist business leaders, politicians and economists – they only serve those who pay them. If you are looking to these folks to steer us correct, we are in big trouble.

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Take a closer look at the chart. The reality is that both taxes and benefits have been fairly flat from the mid 1970s to the mid 2000s. Slight up ticks in this entitlement vs benefits trend can be seen in the mid 2000s, primarily due to president Bush’s tax cuts and expansion of medicaid part D (prescription drugs). But since the 2008 crisis started, government policy has been one of cutting taxes, to save supposedly the economy, and of course due to every one being thrown out of work, benefits to poor have soared.

One of the problems in business is to manage by spreadsheets and not have a clear understanding of strategic events. The strategic problem? The economy broke in 2008. Fix the economy and this chart will self correct. The entitlements are an effect not the cause of the economic ills we face today. Those that advocate massive entitlements cuts are in reality trying to change the shape of our society and have little to do with being fiscally responsible. They want to do away with any social order, in order to dominate people by keeping them poor, unhealthy, uneducated and under their control. This will create class war, social disorder and for sure not a fertile ground for a growing dynamic innovative productive free market economy.

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It does seem like this time the EU politicians and the EU financial institutions will not be able to pull the rabbit out of the hat. The people are soundly rejecting what they have done and are left with change or trying to subvert the people’s will. Europe will have to decide whether the institutions and banks run Europe or the people. For the markets this will put a cloud over the markets for a few months. The current “risk off” pain may continue until the central banks do what they can only do, flood the system with more paper money. At this point the “risk on” trade will return. Of course timing will be everything.

Farage advice for gold? “goodness me, with everything else I’ve seen over the last 72 hours in Europe, buy gold on dips.”

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The device was meant to be put on a U.S.-bound airline, U.S. Rep. Peter King, chairman of the House Homeland Security Committee, reported. The discovery of the bomb plot is just one part of an ongoing operation. Both King and a senior administration official said the intended user of the bomb is no longer a threat.  ”AQAP is the responsible group here,” said a different senior U.S. official. ”While similar, a preliminary review of this device shows that it has some significant differences from the device used in the Christmas Day attack. It is clear that AQAP is revamping its bomb techniques to try to avoid the causes of the failure of the 2009 device,” the official said, referring to the Detroit incident. Recent reports now have the alleged suicide bomber as actually a CIA informant as an operative in a sting operation. The people that funded the bomb maker have been reported to receive money’s from a foriegn government agency (not Iran) yet to be named. So in fact we may have two intelligence agencies involved in terrorist games. What is this?

Ok, here we go again. It seems as if there are terrorist lurking behind every failed state across the globe. Obama knows that he is only one successful terrorist attack away from losing the election. For this reason, I am sure (obviously with no direct knowledge), Obama is pulling out all the intelligence tactics, drone attacks and any other legal or marginally legal attempts to thwart these attacks. But at what costs? The huge financial cost is killing our fiscal situation in the US, but as well, US spying on its on citizens in the US and abroad are reaching a breaking point with the US constitution and its personal liberties issues for an open free democratic state. We are in a no win scenario. Is there a better way?

When power centralises in both big governments and big corporations, we become vulnerable. We are just one successful attack away from having our economy and politics turned upside down. Perhaps there is more safety in a more decentralised power structure, with smaller governments and smaller corporations. One minor event could not take the whole system down. The “too big to exist” is a national security threat. This could not happen as easily if we had a fabric of small business with limited government oversight, other than assuring against the  ”too big to exist”. As well, the “too rich to exist” could not as easily manipulate the system with politics and any potential false flag events – which can be just as scary (tell this to the 911 truthers). Wealth divides can also create disaffected groups, which are a fertile ground for terrorism. Too much power in too few hands can cause a catastrophic single failure point for us all.

For the markets, its only a matter of time until a “black swan” event occurs to take it all down. Don’t live in fear, but be ready to hit the sell button if this occurs…

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Meanwhile the security issues persist and many issues remain on how to monetize its nearly 800 million users. How much money have you given to Facebook recently? Clicked on any of the useless ads? Are you spending countless hours posting your whole life on line so governments and employers can spy on you? Yes I have an account and do not use it – can’t find the password. I find it useless. It is one of these story stocks that dreams of making it big. Is the Facebook IPO worth it. Its worth what ever people are willing to pay for it I guess. I think its just a scam. Good luck to you if you buy it.

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With almost all of the votes counted, Hollande was leading with 51.6% to Sarkozy’s 48.4%, Crowds roared at the center-left candidate’s campaign headquarters as the exit poll results came out Sunday evening. Celebratory car horns blared along the Champs-Elysees in Paris. Meanwhile in our favorite PIGS country, Greece, leading parties have been trounced in weekend elections. Socialist and some far right candidates gained power. The single take away from these elections in Europe is, that Europe is leaning left and current austerity programs are under threat. Can Merkel of Germany stand alone against the rest of Europe? I doubt it. The IMF, the ECB and even the Fed will have to work through a new plan.

The reaction of the markets? Down hard. These victories were well telegraphed before the actual results, so I am not sure why the markets are a bit shocked. In any case, where do we go from here? The leftist governments are always messy. They are generally not confrontational, but have a way of stalling until they get what they want. The bottom line is that central banks and governments are going to have to listen to the people and start loosening up even more money. So after a bit of a chaotic scare, look for the punch bowl to return soon. Buy the big dip. Longer term? This is another story.

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Arnold, 37, left Enron as the energy company collapsed in 2002 and founded Houston-based Centaurus with three employees and $8 million of his own money, according to a 2006 report from the U.S. Senate Permanent Subcommittee on Investigations, which cited a New York Times story. The fund gained fame betting against Amaranth Advisors LLC, a hedge fund that collapsed in 2006 after losing $6.6 billion on bad bets in the natural gas market. Arnold isn’t returning calls or e-mails recently. Perhaps this signals the bottom?

So whats going on in the natural gas market? First of all we all now that for the past decade, new technologies and more liberal governmental drilling licences have lead to a boom in natural gas supply. This increased supply has come with an ever decreasing demand in a declining industrial economy of the US. This has lead to a collapse in the natural gas prices. Will it recover? Perhaps not to the levels we once saw, however there is a dynamic that could change this decade long trend.

Fracking, which has been the chief technology enabler of natural gas supplies. It is more and more clear as more evidence comes out about the environmental health risk of fracking, more environmental control will be placed on the industry, causing fracking extraction cost to rise significantly – or even banned. We are only one environmental catastrophic event away from a major spike higher in natural gas. Careful with the natural gas shorts !!!

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• Men are far more likely to choose careers that are more dangerous, so they naturally pay more.
• Men are far more likely to work in higher-paying fields and occupations (by choice).
• Men are far more likely to take work in uncomfortable, isolated, and undesirable locations that pay more.
• Men work longer hours than women do. The average full-time working man works 6 hours per week or 15 percent longer than the average full-time working woman.
• Men are more likely to take jobs that require work on weekends and evenings and therefore pay more.
• Women business owners make less than half of what male business owners make, which, since they have no boss, means it’s independent of discrimination

Think about it, if the pay difference was widely true, employers would hire only women. And, all the employers that hired men would go out of business because they’d be paying their workforce too much. The truth is, men are more willing to take lousy jobs, work longer, be away from our families. Women make good choices for their families and happiness, they live a different life, and that’s why they earn less. Study after study when all things are equal in a specific job, the pay difference is nil. One study of single, childless urban workers between the ages of 22 and 30 found that women earned 8% more than men. So? For sure there are always exceptions, but certainly not the rule. We already have laws on the books the make it illegal to pay based upon sex, race or any other affected group – as it should be.

If you really want to open a can of worms, did you know that women receive 67% more health care than men (x-pregnancies)? And how about social security? Women live on average 6 years longer and hence receive more benefits than men. So? Do we really want to go down the road with these arguments? A war on men? Those that have read my blog know that I am not a flaming Tea Party Republican conservative. But on this one, they have a point. Let’s keep it real. The point being, before you just believe a headline number one needs to dig deeper into the data to understand why headline data may seem unreal, whether it is on a political topic or even a financial topic.

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Australia’s economy stayed strong throughout the global financial crisis thanks to a mining boom largely fueled by China’s demand for iron ore, coal and natural gas. But the mining boom has also strengthened the Australian dollar, which is pressuring industries outside the resources sector such as agriculture, tourism and manufacturing. So recent rate cuts are signalling the beginning of the end for Australia?

We all know that Australia’s housing market has been inflating over the past few years at parabolic rates. We all know where this is leading. We have seen this story repeat itself all over the globe. When central bankers get nervous and cut rates drastically its the beginning of the end. With macro economic data rolling over globally and the China story begins to wane, Australia, will tank. We have been predicting this for sometime now. It looks like the bubble is starting to pop. Be careful on Aussie longs.

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Such unexpected profit growth comes at a critical time for Wall Street, as investors look to justify the stock market’s momentum, which is pushing nearly back to bull market highs. Friday, the S&P 500 closed just 1.1% shy of its 2012 high. The Dow Jones industrials came even closer, off just 0.3%.

So far, 81% of companies have beaten expectations, topping the 72% of companies that, on average, beat estimates the past four quarters. Nearly all the corporate profit growth is being driven by three sectors — technology, financials and industrials — with 23.4%, 12.9% and 10.4% growth, respectively. Companies are beyond just cutting costs, they have reported 6.2% revenue growth.

So despite the dismal GDP numbers that have been coming in from both imploding Europe and the US (GDP Growth Q1 2012 was only 2.2%), corporate profits continue to go up like a rocket. How can GDP be disappointing and yet corporate profits be up? This phenomenon has been confusing many traders for sometime now. Macro-economic data poor, while corporate profits go up. This is why the recent up tick in equities has been a bit confusing. One explanation could be that, when an economic cycle ends, only the strong survive. In a sense all the small competitors get wiped out leaving only the majors left to get bigger – and they have – hence better corporate profits indicated in the major indexes. Its only when the economy reaches a tipping point (a point where there is no more market share to be won), the equity markets and corporate profits dramatically fall. If we do not see employment and GDP rise soon, this could be precisely the event that will come – it can not continue like this. A potential crash?

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• Fail fast. Try new things without obsessing about perfection. Develop Trade Plans quickly, then get them into practice early. You need to seek real-world feedback from other traders to be able to fix your mistakes.
• Fail forward. If you’re going to fail — and you will — fail in a way that moves your trading, in a new direction. It is certainly possible to fail backward by doing things you’ve done before, trying to recapture past glories, or replicating what made you a success a decade ago. Failure leads to success only if you’re stretching yourself, trying new things, innovating.
• Fail smart. You don’t learn much or gain much if you fail because you’re doing something stupid and avoidable. Learn first from the mistakes of others: study why trading of others did not work. Failure is useful only if you’re learning something from it.
• Fail cheap. Try to keep your financial losses from a failure as minimal as possible. One way to do this is to start lean. Try new things with the least amount of investment to test a concept. The idea is to launch a minimally viable version of your Trade Plans whatever you’re trying. Remember, it doesn’t have to be perfect.
• Fail with integrity. Character matters. Even if you fail, people who worked with you before, even invested in you, may be willing to team with you again in the future. But you have to have proven yourself to be a person they trust and respect. If you failed because you are dishonest, your word is unreliable or you are a cheater, your one failure is very likely to become permanent failure. Experienced and intelligent people will forgive your failures if they’re honest attempts to accomplish something. Keep in mind that an unexamined failure is just a plain failure. You’ve got to learn from your mistakes and failures to grow.

When I was learning to ski, one of my instructors told me, “If you’re not falling, you’re not learning.” The same can be said for your trading career: If you’re not failing, you’re not learning.

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